SC refuses to stay ₹144.5 crore deposit order against SpiceJet, imposes ₹1 lakh in costs for prolonging litigation
New Delhi: In a blow to budget carrier SpiceJet, the Supreme Court on Friday refused to stay the Delhi high court order directing the airline and its promoter Ajay Singh to deposit money. ₹KAL Airways Pvt. 144.51 crore in the long-running arbitration dispute with. Ltd and Kalanithi Maran. The court also ordered costs ₹1 lakh for prolonging the case.
A bench comprising Justices P S Narasimha and Alok Aradhe refused to interfere with the high court’s January 19 order and scolded the company for repeated litigation over the issue.
During the hearing, SpiceJet’s senior lawyer Amit Sibal urged the court not to impose costs. However, the panel noted that there were “tons of cases” before reaching its decision and that the court “never sees the end of the case” in the arbitration dispute. ₹1 lakh in costs. It was also stated that this amount could be increased. ₹2 lakhs if such demands continue.
Rejection of relief means SpiceJet must comply with the high court’s January 19 deposit order ₹144.51 crore in six weeks.
Emailed queries to SpiceJet remained unanswered till press time.
Supreme court findings
Justice Subramonium Prasad of the Delhi high court noted in his judgment dated January 19 that SpiceJet had confessed. ₹194.51 crore was due and payable as per the Supreme Court’s earlier directions. After setting ₹50 crore has already been deposited, ₹144.51 crore remained outstanding.
The apex court noted that the Supreme Court had issued clear directions in February and July 2023 that had to be followed within specific timelines and these directions were not fully complied with.
Rejecting SpiceJet’s argument that enforcement should await the final outcome of their objection to the arbitration award, the court held that the Supreme Court orders cannot be left indefinite. Citing Article 144 of the Constitution, which requires all officials to assist the Supreme Court, the court said the continued delay weakens its judicial authority.
Accordingly, he directed SpiceJet and Ajay Singh to deposit money. ₹144.51 crore on record in six weeks.
Origins of the dispute
The dispute dates back to January 2015, when Kalanithi Maran and KAL Airways transferred their 58.46% stake in SpiceJet to Ajay Singh under a share sale and purchase deal at a time when the airline was facing severe financial distress.
As part of the agreement, Maran and KAL Airways will fly approx. ₹$679 billion was invested in the airline for the issuance of convertible warrants and preferred shares. Maran then demanded a refund, claiming that these documents were not issued under the new management.
The matter was referred to arbitration by a three-member tribunal comprising retired Supreme Court judges.
In July 2018, the court rejected Maran’s request. ₹1,323 crore compensation sought but SpiceJet ordered to refund ₹579 crore along with interest on warrants and preference shares.
Both parties challenged aspects of the award before the Delhi high court under the Arbitration and Conciliation Act, triggering a protracted phase of enforcement petitions, appeals and interim orders.
In February 2023, the Supreme Court ordered an encashment. ₹270 crore bank guarantee and payment order to SpiceJet ₹75 crore interest would be paid within a specified period, warning that non-compliance would make the award fully unenforceable.
While significant difficulties continued, enforcement proceedings proceeded in parallel, and Maran alleged that payment instructions were consistently not complied with.
The dispute has remained a significant legal and financial burden for SpiceJet, which has faced liquidity pressures, groundings of planes over unpaid dues and bankruptcy petitions from some lessors and creditors in recent years.
